IMPORTANCE OF ECONOMICS

Introduction:
Why Economics is Important in Human Life?
Economics subject is the oldest of arts and newest of sciences. It is mainly concerned
with how society employs scarce resources to produce goods and to satisfy future
consumption. Modern day welfare states are expected to provide maximum welfare
to the society by effectively allocating and distributing resources.
Wants are the starting point of subject economics. We cannot satisfy all our wants
because human wants are unlimited and the resources to satisfy these wants are
limited. We have many wants but not all are of equal importance. We prioritize the
needs and more urgent wants.
In this situation, an individual or the nation is expected to make choice among
unlimited wants to satisfy the first. Economics is also known as the science of
making choice. For example a nation has the following wants namely production of
guns, production of butter, construction of school, cinema houses, manufacturing
buses, cars etc.,
Due to scarcity in resources a nation cannot satisfy all the wants, Hence the Nation is
expected to make choice among the given wants. The most important and urgent
wants among them would be satisfied initially. Naturally, the nations choice would
be 1) production of food (butter) 2) construction of school buildings,
3) manufacturing of buses.
Making choice among the unlimited wants is the subject matter in study of
economics. To know about the nature and scope of economics let us discuss some of
the important definitions of economics given by leading economists.
Adam Smiths definition on Economics (Wealth definition)
Adam smith also known as Father of Economics defined Economics in his famous
book published in 1776 namely, Wealth of Nations. He defines;
Economics is the science study about the nature and causes of wealth of Nations.
Adam smith was criticized because the scope of economics is not studying about
wealth alone above all it studies about welfare of men also.
Alfred Marshal, definition on Economics (welfare definition)
Alfred Marshal in his book Principles of Economics defines economics as followsEconomics is the study of actions of mankind in the ordinary business of life.
Marshall opines that economics one side study about wealth and the other and
important side 6 study about the welfare of mankind. According to him economics
deals more importantly about welfare of human than wealth.

Lionel Robbins definition on Economics (scarcity definition)

Lionel Robbins defines the meaning of economics in his celebrated book namely, An
Essay on the Nature and significance of Economic science. According to Robbins,
Economics is the science which studies human behavior as a relationship between
ends and scarce means which have alternative uses. From the above definition, we
can understand that the ends (wants) are unlimited and the resources are scarce with
alternative uses. Economics studies how human beings relate ends and scarce means
to attain maximum satisfaction.
Samuelsons Definition (Modern Definition of Economics)
Samuelsons definition is known as a modern definition of economics. According to
Samuelson,
Economics is a social science concerned chiefly with the way society
chooses to employ its resources, which have alternative uses, to produce goods and
services for present and future consumption. Prof. Samuelson and Robbins have
many common points such as ends, scarce means with alternative uses. However,
Samuelson goes deeply a step further and says how a society uses limited resources
for producing goods and services for present and future production and
consumption.
The main objective of economics is to promote human welfare. All the economic
activities are performed to promote human welfare.
The theory of economics teaches us how to maximize human welfare with the given
level of income and resources.
It provides us important tools not only for the best utilization of available limited
resources but also the ways and means to augment these resources. The theory of
8 economics helps us to understand how to produce the maximum output by the
proper use of limited resources.
The main objective of consumers is maximum satisfaction. What is the main
objective of producers?
The answer will be profit. The study of economics helps consumers to get
maximum satisfaction and producers to choose the level of output that give
maximum profit.
Money plays very important role in the life of human beings it is the medium
through which we buy and sell the goods and services. Apart from buying and
selling of goods, money is used to make payment for a rented house, wages to the
hired labourers and to repay the borrowed loans etc.
It is important to study economics because it gives us knowledge of how to use our
money when buying new items like cars, house, clothes goods etc In economics we
study the role of money in the life of human beings.

In economics subject we study how the price of the commodity is determined in the
market, how it is changed according to the changing demand for the commodity and
supply of the commodity.
It also studies how rise or fall in price affects the human welfare or human
satisfaction of the consumers and profit of the producers.
Economics subject is important because it helps us to predict the production,
consumption and distribution of goods and services based on human behaviour.
Economics subject provides us the knowledge and insight to understand the
challenges faced by the country such as unemployment, poverty, inequality of
income and wealth, price rise, problem of rising population etc,
Many countries adopted the technique of planning to increase their economics
growth. The planners have to allocate the resources rationally to achieve balanced
economic growth.
Economic being a science provides rational use of natural and human resources
to achieve higher and balanced economic growth.
The knowledge of economics is indispensible to manage development activities of a
country. The politicians and the officials of a country need to have proper
knowledge of economics to plan for the future and to prepare budget, industrial and
trade policies.
To have good politics good economics is necessary.
To have better understanding of international affairs the knowledge of economics is
essential. It is necessary to know and understand the socio economic issues of
different countries, international trade etc.,
Economics is valuable not only as the subject of study but also enhances the values
such as analyzing arguments, empirical predictions, comprehension, rationality,
numerical ability, interpretation techniques, interdependence and various other
skills which are necessary for human life.
Thus, economics is applicable in a wide range of fields such as decisions of
households, businesses and governments, finance, administration, law, production,
consumption, distribution, trade, and banking. There is no field in life of human
beings, which is not influenced by the Economics.
The problems faced by the modern states are basically economic in nature.

Economists play an important role in solving the problems of states. When Germany
faced problems from high price rise, shortage of goods ,and mass unemployment
during Second World War,
Hence we may conclude that study of economics is very important for an individual
or the nation to develop. One cannot rationally think, if he/she does not have
knowledge in economics.
THE END